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Tariff Trim: India’s Move Could Turn Apple into the Biggest Winner in Smartphone Market

India supply chain of apple
According to reports, the Indian government is considering reducing import tariffs on key components of high-end smartphones, a move that could benefit companies like Apple and boost the country's exports. Industry experts believe that this tax reduction policy could significantly enhance India's exports, making Apple a potential "big winner."

Two Indian officials stated that the government is exploring the reduction of import tariffs on key components of high-end smartphones, potentially favoring companies like Apple and boosting the country’s exports.

Companies in relevant sectors have been advocating for tariff reductions on over a dozen components to lower the manufacturing costs of smartphones in India and improve competitiveness against rivals in China, Vietnam, and other regions.

An Indian official mentioned that the proposal to lower tariffs, which may include components like camera modules for high-end smartphones, could be included in the federal budget set to be released on February 1. However, it remains uncertain which specific components will be covered. Another official stated that lens components for high-end smartphones could be part of the proposal.

Sources indicate that the finance ministry will make decisions on the reductions after finalizing the budget.

As per the India Cellular and Electronics Association (ICEA), the current import tariff range for smartphone components like camera modules and chargers in India is between 2.5% and 20%, the highest among six manufacturing countries, including China, Vietnam, Mexico, and Thailand. The industry association warns that without tariff reductions, India’s smartphone export growth may slow down.

India Cellular and Electronics Association

Apart from Apple, India’s smartphone exporters include Samsung, Xiaomi, and other companies.

The Indian Ministry of Electronics, the Finance Ministry, and Apple have not publicly commented on the matter.

With increased investments from Apple suppliers, the production of iPhones in India has grown rapidly. In 2023, iPhones produced by Apple suppliers in India had a factory value of over 1 trillion rupees (approximately $12 billion), and the export value, calculated at Free on Board (FOB) prices, was 650 billion rupees. Estimated at market value, the production value of iPhones manufactured in India in 2023 is expected to be between 1.5 trillion and 1.7 trillion rupees.

Apple has been keen on diversifying its supply chain, with the “Make in India” initiative being a crucial part of its strategy. Apple is actively seeking more suppliers in India and encouraging assemblers like Foxconn and Wistron to expand their investments in the country. Apple aims to produce 50 million iPhones in India by 2030, constituting around 25% of the global iPhone production.

Earlier reports indicated that Apple has fulfilled its commitment to make India its second home for iPhone manufacturing and is expanding its supply chain in the country. Last year, the Indian Minister of Commerce mentioned that Apple aimed to increase its manufacturing share in India to 25% of its global manufacturing volume. The Deputy Minister of the Ministry of Information Technology in India also suggested that the company could double or triple its investments and exports in the country in the coming years.

Apple’s financial reports show global iPhone sales revenue of $200.583 billion, and the production value of iPhones in India, estimated at 1.5 trillion to 1.7 trillion rupees, indicates that iPhones manufactured in India account for 9.6% of Apple’s global iPhone sales volume.

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